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Help to Buy Scheme Mortgages With Low Rates Available Now

Are you a first-time buyer struggling to save up a large enough deposit to get on that first rung of the housing ladder? Well, you’re not alone – recent research reveals that 7 out of 10 under 40’s applying for a mortgage are now hoping for help from the Government Help to Buy scheme. Help to Buy mortgages are now a popular topic of conversation amongst potential home owners across the UK.

The Government Help to Buy scheme helps first-time buyers and existing homeowners get Help to Buy mortgages, even if they only have a small deposit available. To be eligible for the Help to Buy initiative, you must:
• Have at least a 5 per cent deposit
• Be buying a home worth £600,000 or less
• Be intending to reside in the property most of the time – i.e. not a second home or a buy-to-let property.

The Government Help to Buy scheme is available in one of two ways: either through an equity loan scheme or a mortgage guarantee scheme.

Equity Loan Scheme

The Help to Buy equity loan scheme is designed to help first-time buyers and homeowners with a deposit as low as 5 per cent, to be able to purchase a new build house in England. Available until 31 March 2016, the Government pledges to offer borrowers a loan for a further 20 per cent of the property. The net result is then that just a 75 per cent mortgage is needed from the lender.

• Available to both first-time buyers and home movers
• Available for new build properties only in England
• Property must be valued at £600,000 or less
• Minimum deposit of 5 per cent of full purchase price required from the buyer
• Mortgage secured for up to 75 per cent from the commercial lender
• Equity loan for up to 20 per cent provided by the Government

Similar Help to Buy schemes are also operating in both Scotland and Wales. Backed by the Scottish and Welsh Governments, they help people to buy a new build home from a participating home builder by providing help for up to 20 per cent of the house purchase price.

Mortgage Guarantee

The Help to Buy mortgage guarantee scheme is also aimed at helping first-time buyers and existing homeowners with as little as 5 per cent deposit, to buy either an existing property in the UK or a new build. With this scheme, a mortgage of up to 95 per cent is needed from a lender, but crucially the Government will guarantee the lender up to 15 per cent of the property’s value.

• Available to both first-time buyers and home movers
• Available for new build and existing UK properties
• Property must be valued at £600,000 or less
• Minimum deposit of 5 per cent of full purchase price required from the buyer
• Mortgage secured for up to 95 per cent from the commercial lender
• Government will guarantee up to 15 per cent of the property’s value

Which Help to Buy Scheme is Best?

The answer obviously depends on your personal circumstances. The crucial difference with an equity loan is that the Government will own 20 per cent of the property – at least until you can pay it back. The benefit, however, is you can borrow less from a commercial lender. Equity loans are interest-free for the initial five years but after that, there are also admin fees that added for repayment. The really goods news is, help to buy schemes are enabling more people to get on the property ladder, they achieve this by lowering the amount required for a deposit, making more people eligible via UK help to buy mortgages to buy their first home.

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